The Zacks Analyst Blog Highlights: Oracle, Juniper Networks, Apple, Cisco Systems and Hewlett-Packard Company

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Sep 21, 2011, 09:30 ET

CHICAGO, Sept. 21, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Oracle Corporation (Nasdaq: ORCL), Juniper Networks Inc. (NYSE: JNPR), Apple Inc. (Nasdaq: AAPL), Cisco Systems Inc. (Nasdaq: CSCO) and Hewlett-Packard Company (NYSE: HPQ).

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Here are highlights from Tuesday's Analyst Blog:

Oracle Again Posts Modest Beat

After the bell Tuesday, Oracle Corporation (Nasdaq: ORCL) reported earnings for its fiscal 1st quarter of 2012, and as per usual the giant tech firm beat estimates, albeit on somewhat modest expectations. Reported EPS of 45 cents per share (Zacks is not taking the entire amortization charge in the company's headline 48 cents per share number) beat the Zacks Consensus Estimate of 44 cents, and revenues of $8.4 billion topped Zacks expectations of $8.3 billion.

New software revenue posted toward the high end of its guidance range, +17%, although hardware performed toward the low end of guidance, -5%. Second-quarter guidance will come out toward the end of the company's conference call, although this -- much like the way Oracle always beats estimates but almost never by an extraordinary margin -- is also expected to be modest.

None of the 15 analysts covering Oracle had made any revisions to their estimates on Oracle's Q1 over the past 30 days, though Q2 and fiscal 2012 (and fiscal 2013) estimate revisions do show a slight downward bias over that time period. Uncertainties in the European market and weaker corporate spending overall account for most of this downward sentiment.

Oracle shares are down roughly 17% since June 1st, and dropped another 2.3% in Tuesday regular trading. However, in the after-market as of this time, ORCL is up about 0.6%. It would seem plenty of potential bad news may have been baked into Oracle's share price, as the company reached its 52-week low just a few weeks ago.

Juniper in Twin Marketing Deals

Juniper Networks Inc. (NYSE: JNPR) announced that online video game provider, OnLive has selected its network infrastructure for an undisclosed amount. OnLive intends to upgrade its data center infrastructure with Juniper's routing, switching and security solutions.

OnLive pioneered the cloud gaming platform where games are synchronized, rendered and stored on remote servers, and thereafter delivered via the Internet. The service is available on OnLive Game System on any PC and Apple Inc.'s (Nasdaq: AAPL) MAC.

The online video game provider picked up Juniper's EX4200 Ethernet Switches with Virtual Chassis fabric technology, MX960 3D Universal Edge Routers and SRX3400 Series Services Gateway. Leveraging Juniper's network architecture, OnLive will be able to deliver greater bandwidth, speeding up the information transmission process. Apart from this, OnLive might also opt for Juniper's QFabric solution to achieve exponential improvements in data center speed, scale and efficiency.

In another recent development, Juniper's MX Series 3D Universal Edge Routers was selected by fiber optic network services provider FiberLight LLC. This switch will offer FiberLight customers steady and secure network services, helping them meet new requirements without coughing up huge amounts.

Juniper's networking architecture runs on the Junos operating software, a single-window operating system, and simplifies networking operations while reducing the cost of ownership. Moreover, the platform provides room for capability improvement, without additional capital. We can consider these as the key factors for both firms to single out the Juniper offering.

We remain encouraged by the rapid deployment of Juniper's networking products and services by organizations and governments. We find the company's acquisitions a good strategy for enriching its product portfolio.

However, Juniper's underperformance in the second quarter keeps us on the sidelines. We believe that competition from large companies, such as Cisco Systems Inc. (Nasdaq: CSCO) and Hewlett-Packard Company's (NYSE: HPQ) networking businesses could pressure gross margins, forcing Juniper to lower its price in order to gain or maintain market share. Moreover, management's decision to continue investments in research and development could also pressure margins.

Juniper's European exposure and federal dependency are also concerns, contributing to recent estimate cuts.

Currently, Juniper has a Zacks #4 Rank, implying a short-term Sell recommendation.

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